The Great Risk Shift: The Assault on American Jobs, Families, Health Care, and Retirement–And How You Can Fight Back

by Jacob S. Hacker

Oxford University Press, 240 pp.

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The Disquieting Effects of the New Economy

After winning reelection in 2004, President George W. Bush made restructuring Social Security his top domestic priority. In place of the long-standing New Deal system that guarantees a minimum income to all of the nation’s retirees, Bush proposed a system of private accounts that could, in theory, allow workers to save more for retirement, but also exposed them to the possibility of having nothing. To Bush and his supporters, this shift would have represented something of a culmination of the triumph of “personal responsibility.”

The proposal failed, of course. But to Jacob Hacker, author of the recent book The Great Risk Shift: The Assault on American Jobs, Families, Health Care, and Retirement and How You Can Fight Back, the effort to dismantle the Social Security system on which so many Americans depend is one piece of a larger campaign that, in the name of personal responsibility, is exposing Americans to the sorts of financial and health risks that can potentially wreck their lives.

Hacker’s book offers a substantive contribution to public debates on economic inequality precisely because this focus on risk and security—rather than strict inequality—shows that strict measures of economic inequality understate the potential economic threats many American face. Thus, for example, while typical measures place the number of Americans who lack health insurance at 47 million, Hacker notes that during a two year period, as many as 80 million people will be uninsured for some of those two years.

This unsettling has come because the move from pooled risk as Hacker describes it, to personal responsibility, has reached far beyond Social Security and into the realm of private markets where employers no longer offer reliable middle class pay or fringe benefits to employees. Whereas the nation’s largest employer in the 1960s, General Motors, offered close to $30,000 a year on average to employees in addition to pension and health benefits, the current largest employer Wal-Mart pays out around $17,000 and gives minimal benefits.

In a sense, the difference between General Motors, which sought to increase productivity and profits through long-term, mutually beneficial relationships with employees, and Wal-Mart, which seeks to boost profits by deskilling jobs to make employees expendable, highlights the disintegration of what Hacker describes as the previous system of “shared fate.”

This expendability has created a working environment in which even college-educated, long-serving employees fear losing good jobs with no guarantee that future employment will be anything but a part-time, service sector job. Indeed, average wages have decreased among a broad group of Americans in the past three decades, to the point that among men, only those with graduate degrees have experienced significant wage growth. (Women, according to Hacker, are making more money but largely because of increased work hours rather than increased pay per hour.)

The insecurity of jobs has contributed to a variety of other insecurities. Since most Americans obtain health insurance through their employers, they are exposed to medical risk. Since mortgage payments are planned over decades, people who have to take lower-paying jobs have trouble keeping their homes. Hacker’s point is not that all Americans are much worse off than in the past; rather, it is that Americans are much less insulated from financial catastrophe than in years past.

Instead of responding to this risk shift by expanding the social safety net, Hacker argues that the Republicans in control of the federal government have, in recent years, exacerbated the problem by promoting personal responsibility over shared fate. Thus President Bush responded to a potential long-term shortfall in the Social Security trust fund by advocating private accounts and has proposed private health savings accounts as the way for uninsured Americans to gain some modicum of control over their medical security.

While Hacker does an outstanding job of demonstrating how this systemic risk transference underlies several sectors of the economy, his policy prescriptions seem, at times, to contradict his discussion of this shift. Indeed, since risk has shifted in dramatic and uncontrollable ways for most families, it seems a bit out of place to focus a good chunk of the book’s conclusion on recommending that readers manage their money better and create detailed family budgets.

Where Hacker does offer some national policy prescriptions they seem skeletal. This, in part, is intentional, as Hacker’s book seems aimed at a general audience rather than at policymakers and bureaucrats. But whereas the rest of his book is backed with exhaustive data, his policy prescriptions are somewhat barebones.

Despite these weaknesses, his proposals are intriguing and at times innovative, and in many ways, are a postscript to an outstanding economic study. The real strength of Hacker’s book is his ability to recast the debates on personal responsibility. In this sense, he has written an important and persuasive work that should contribute substantively to public debates on economic security.